A business succession is a process that requires thought, planning and time to arrange and to execute. Your own measure of success may be the fact the business has transitioned to and prospered in, the hands of a family member or other new owner. Or perhaps, you want to make sure your company continues to employ people in your town.
Whatever your definition of success, making the commitment to let go of the business and place it in the hands of someone else is perhaps the critical factor, that ensures your business transition goes smoothly and profitably.
More time gives you more options
Do you want to keep the business in the family or harvest it and live off the proceeds? How about splitting the business into more easily managed chunks, hiring a chief executive to operate it, or selling it to employees or even competitors. Each option has its pros and cons.
The earlier you start, the more time you'll have to:
- identify your options and choose among them
- determine your company's profitability and future growth
- benchmark your company against similar ones in the industry
- implement strategies to improve your company's standing.
Finally, if you start early, you can set the succession timetable including optimal dates for your retirement and the transfer of property and decision-making powers.
Identify and train the right successor
Your successor can be a family member, a trusted manager, an employee or even a competitor, but the right person must be identified.
Establish a process for identifying the right candidates, and then make that process known to all concerned. If the process is out in the open, then everyone has an equal chance at making it to the top job. It's probably a good idea to base your selection process on industry-standard techniques.
Once your successor has been chosen, that person can be introduced to your staff, your clients and your community. This provides the boss-in-training authority to run the operation.
Moving on
It can be hard to leave a business that for many years has been a major source of pride for you and your family. You can make your exit knowing that the business is in good hands once you've settled all the family and leadership issues and put in place the legal, financial and tax components.
Moving on can be the hardest commitment to keep, but if you've planned and executed the transition properly, your business and your community will continue to be served by an institution built by you and your family.
Get expert help
Specialists can help guide your business and family in the right direction. They can get involved with some of the more complicated details of business valuation and shareholder agreements while you focus on running and perhaps even improving the business.
All the possibilities mentioned above, carry legal and financial implications and you should confer with your lawyer or accountant. You can also rely on BDC Consulting's national network of business advisors that provides succession planning and business valuation services.
For more information on the subject of business succession planning, read Creating a business succession plan, Make it work for your family and What's your business worth.
Whatever path or options you choose, the deciding factor for a successful outcome is your commitment to succession planning.
